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Before the Call: Rating TiVo

Quarter, schmorter. What's the big picture look like?

In its seemingly endless quest for profitability, TiVo (NASDAQ:TIVO) claims to have many tricks up its sleeve. Its latest is the ability to monitor customers' DVR use in real time, to see whether they're watching commercials or skipping them. The firm's recent deal to provide such data to Interpublic (NYSE:IPG) suggests there's real interest in the service. But today, in these few hours before TiVo reports its fiscal Q1 2008 numbers, we'll be looking at ratings a bit differently -- investigating what kind of rating investors give to TiVo itself.

After the earnings news comes out, we'll have time aplenty to dissect it. But before we begin obsessing over TiVo's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 29,000 investors for their views on well more than 4,000 companies, TiVo among them. Here's what Fools have to say about the company.

Up or down?More than 600 investors have submitted ratings on TiVo. Their verdict: Delete this stock.

Seventy-seven percent of CAPS investors expect TiVo to outperform the market, but if you drill down to what the very best investors -- the CAPS All-Stars -- are saying, support drops to only 72%. That's only sufficient to win TiVo two stars out of a possible five on CAPS.

Within its CAPS peer group, TiVo settles towards the bottom of the list:

Wall Street vs. Main StreetWall Street sentiment is, if anything, even more pessimistic. Of the six TiVo-tracking analysts we monitor, half expect the firm to outperform the market, while the other half expect it to underperform. With the stock down 25 percentage points relative to the S&P 500 over the last 52 weeks, the nays are winning so far.

Most people do not understand the value of TiVo's patent victory at the trial level against Echostar. That victory has about an 85% chance of being upheld at the appeal court level, and that verdict will most likely be rendered sometime between September 2007 and early 2008. At a minimum, TiVo will get the original damages of $73 million plus interest, which alone would be around $200 million by the end of calendar year 2007. On top of that, TiVo is seeking that the damage award be trebled (tripled) for willful infringement, which the jury decided in TiVo's favor, and which could force Echostar to pay up to $600 million.

That's just an excerpt, by the way. The full analysis goes on for several more paragraphs -- but I think you get the gist. Suffice it to say that this pitcher thinks TiVo has a great case and a bright future, all built on intellectual property. And the kicker? This CAPS player is a patent attorney.

Bear pitchIn apparent proof of the bull thesis, TiVo pessimists cite the hordes of "me-too" products with which TiVo's groundbreaking device must contend in arguing that the company is doomed. According to the bears, TiVo can't compete with cheaper products from numerous alternative suppliers. As one bear puts it: "This company is going to get killed by the competition and fade away to obscurity." And bears think things will only get worse, as "AppleTV will take a huge chunk of their market."

Who said that?To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, just click here.

And if you're interested in exploring the stock even further, grab a free trial subscription to Motley Fool Stock Advisor on your way out. TiVo is an official recommendation of the newsletter, and we've got a detailed investment thesis laid out for it, along with up-to-date commentary on the company's performance since we first recommended it two years ago.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 1,493 out of more than 29,000 raters. Best Buy is also a Stock Advisor recommendation. The Fool has a disclosure policy.

Author

I like things that go "boom." Sonic or otherwise, that means I tend to gravitate towards defense and aerospace stocks. But to tell the truth, over the course of a dozen years writing for The Motley Fool, I have covered -- and continue to cover -- everything from retailers to consumer goods stocks, and from tech to banks to insurers as well. Follow me on Twitter or Facebook for the most important developments in defense & aerospace news, and other great stories besides.